TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1814
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....Village Shiholi Moti, Gandhinagar 1,23,67,360/- 70,00,000/- 2 Survey No. 85, Khata No. 115, Moje Vastral, Ahmedabad 3,40,00,000/- 1,13,33,336/- 3. The AO issued notices dated 11.12.2018 and 26.08.2019, proposing to invoke section 201(1)/201(1A) for failure to deduct tax at source under section 194IA. The assessee, in reply dated 01.01.2019, submitted that both lands were agricultural lands and not subject to TDS under section 194IA. It was also contended that the consideration paid to each individual seller was less than Rs. 50 lakhs. The AO obtained confirmations from AUDA and GUDA. GUDA, vide letter dated 17.07.2021, stated that the Shiholi land is 2.61 km from the Gandhinagar Municipal limits. AUDA confirmed that the Vastral land is within Ahmedabad Municipality. Based on these reports, the AO held that both properties are "urban lands" within the meaning of section 2(14)(iii) and not agricultural. Further, since the assessee's share in both transactions exceeded Rs. 50 lakhs, section 194IA was held applicable. The AO computed the default and interest as under: Property TDS Default (Rs.) Interest u/s 201(1A) (Rs.) Total (Rs.) Shiholi 70,000/- 60,900/- 1,30,900/....
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.... proviso to section 201(1) of the Act and as such the demand raised of Rs. 2,06,266/- requires to be deleted. 8. That the assessee has not made any default U/s 201(1) / 201(1A), however the penalty proceedings-initiated u/s 271C of the act, requires to be dropped. 9. The assessee craves leave to add, alter, amend or delete any grounds of appeal before the appeal finally heard and decided. 5. During the course of hearing before us the learned Authorized Representative (AR) of the assessee submitted that the Assessing Officer as well as the CIT(A) have erred in treating the assessee as "assessee in default" under section 201(1) for non-deduction of TDS under section 194IA of the Act, without appreciating the correct legal position and factual matrix. The AR submitted that during the relevant year, the assessee had jointly purchased two parcels of land, namely: (i) Land at Survey No. 196, Khata No. 430, Village Moti Shiholi, Dist. Gandhinagar, for a total consideration of Rs. 1,23,67,360/-, out of which the assessee's share was Rs. 70,00,000/-, and (ii) Land at Survey No. 85, Moje Vastral, Ahmedabad, for a total consideration of Rs. 3,40,00,000/-, out of which the assessee....
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....ized that the AO had rightly rejected the argument of the assessee by holding that the threshold must be applied from the perspective of each transferee's share in the property, and not with reference to individual sellers. 8. We have considered the rival submissions and perused the relevant materials available on record. The facts are not in dispute. The contention of the assessee is that the amount paid to each seller was less than Rs. 50,00,000/-, and therefore, the provisions of section 194IA of the Act were not attracted. The assessee also placed reliance on the decision of the Co-ordinate Bench in the case of Archanaben Rajendrasingh Deval v. ITO, TDS Ward-1, Ahmedabad, ITA No. 1465/Ahd/2024, order dated 02.04.2025 where the Co-ordinate bench after relying on various decisions of the Co-ordinate Bench [Bhikhabhai H. Patel vs. DCIT (ITA No. 1680/Ahd/2018, order dated 31.01.2020) and Vinod Soni v. ITO (ITA No. 2736/Del/2015 order dated 10.12.2018)] held that for the purposes of section 194IA of the Act, the threshold of Rs. 50 lakhs is to be examined with reference to each transferee and each transferor individually. Where the amount paid to any one transferor is below Rs. 50 ....
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....e decision of the Coordinate Bench in the case of Bhikhabhai H. Patel (supra) is well placed where it was held that for the purposes of section 194IA of the Act, the threshold of Rs. 50 lakhs is to be examined with reference to each transferee and each transferor individually. Where the amount paid to any one transferor is below Rs. 50 lakhs, the transferee is not obliged to deduct tax under section 194IA of the Act. 9.3. In paragraph 5.2 of its order in the case of Vinod Soni (supra), the Coordinate Bench categorically observed that section 194IA(1) of the Act imposes a deduction obligation on "any person being a transferee", and therefore, section 194IA(2) of the Act, which provides a threshold exemption, must also logically apply with reference to the individual transferee. The said para is reproduced herewith for clarity and ready reference - "5.2 After perusing the Paper Book and the relevant provisions of law, we find that Section 194- IA(2) provides that Section 194- IA(1) will not applicable where the consideration for transfer of immovable property is less than Rs. 50,00,000/ -. However, section 194- IA(1) is applicable on any person being a transferee, so section 194-....
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.... and as a result thereof, the appeal of the assessee is allowed." 9.4 Applying the above reasoning to the facts of the present case, we note that the assessee paid Rs. 21,83,680/- to one seller and Rs. 31,83,680/- to another seller - both of which are individually below Rs. 50,00,000/-. In line with the interpretation adopted in the case of Bhikhabhai H. Patel (supra), we hold that the provisions of section 194IA of the Act were not attracted in the case of the assessee. 9. In the present case, as per the admitted facts on record, the assessee paid Rs. 21,83,680/- to one transferor and Rs. 31,83,680/- to another, both of which are individually below Rs. 50 lakhs. Therefore, in light of the above judicial interpretation, the provisions of section 194IA are not attracted. We further note that the amendment to section 194IA(2) of the Act by insertion of a proviso vide Finance Act, 2023, which treats the threshold on aggregate basis, is applicable only from 01.10.2024 and hence has no application to Assessment Year 2015-16 under consideration. 9.1. The CIT(A), however, passed the order in an ex parte manner, without affording an effective opportunity of hearing to the assessee and ....